Getting ready to end your trip to the UK after a fantastic shopping spree? Don’t forget the final step before leaving the country: claiming your VAT refund. In this guide, we will introduce you to how to get a VAT refund for shopping in the UK, including the refund conditions, the refund process, and the locations where you can claim your VAT refund.
The UK ended VAT-free shopping for tourists in 2020, but on September 23, 2022, UK Finance Minister Kwasi Kwarteng announced plans to bring it back. The aim is to boost the retail sector by attracting more tourists and stimulating economic growth. The Treasury hopes to reintroduce VAT-free shopping for overseas visitors, making it easier for them to shop and reclaim tax refunds. Additionally, they are considering replacing the old paper-based system with a digital one to streamline the process. However, there hasn’t been any further progress on this initiative, so it’s unclear when or if the policy will be implemented. If it does move forward, it could be launched between 2024 and 2025.
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VAT Refund Conditions
– Why is there such a thing as a VAT refund?
This is because, in the UK, a certain amount of VAT(Value-added Tax) is included in the selling price of goods.
Selling Price = the Price of the Goods + 20% VAT
However, the tax you pay is intended for UK residents and doesn’t apply to tourists or individuals leaving the EU. Therefore, you are eligible for a tax refund, and the amount should be reimbursed to you.
– Who can get a VAT refund?
Generally speaking, non-EU residents travelling to the UK for tourism, family visits or visits, or non-EU students or workers living in the UK for a long period who are leaving the EU for 12 months or more are eligible for a VAT refund.
More details:
- For stays in the UK lasting more than 6 months, considered as long-term residence, VAT refunds are not applicable. However, if your visa is expiring and you won’t be returning within 12 months of leaving the EU, you are eligible for a VAT refund.
- If you are on a long-term tourist visa, there are a few things to keep in mind. Nowadays, many people opt for a UK tourist visa for one or two years. Keep in mind that VAT refunds are not available for purchases made within the first three months. If you’re interested in luxury goods, it’s best to make those purchases in the last three months.
- It’s important to note that individuals with British permanent residence and nationality are not eligible for VAT refunds.
Refund Amount and Applicable Goods
– How much can I receive in VAT refunds?
As mentioned before, a VAT refund is a reimbursement of the VAT amount. In the UK, the VAT rate is 20%, but the refund you receive won’t be 20% of the total item price. This is because the price you pay already includes the VAT. So, in reality, the VAT portion you paid is around 17% of the price you paid for the item.
However, after deducting the refund company’s fee, the final refund is only about 12% of the price you paid.
For example, if you buy a £1,000 bag, you’ll end up with a tax refund of about £122. According to the calculator, the more you buy in the same shop, the higher your refund will be. Let’s say if you buy £10,000, you’ll get £1,400 back.
– What items are eligible for a VAT refund?
Only certain items are eligible for a VAT refund. Typically, items with a “Tax-Free” sign in the store qualify for a VAT refund. However, not all items with the sign are refundable, so it’s advisable to inquire with the salesperson before making a purchase.
Major shopping destinations in the UK, such as Selfridges, Harrods, Harvey Nichols, Liberty, Bicester Shopping Village, and Burberry discount shops, provide VAT refund services.
Additionally, there are some places, like TK Maxx in the UK, that offer VAT refunds even if they don’t have a Tax-Free sign. Make sure to request a VAT refund form when making your purchases.
– What items are not eligible for a VAT refund?
- Second-hand items, including cars, clothes, bags, etc
- Service charges, such as hotel and taxi fares
- Goods without VAT, such as food, books, children’s clothes, etc
- Cars
- Goods exported for commercial purposes with a value over £600
- Individual gemstones
- Online shopping items (except for some e-commerce companies who can refund tax directly online for direct shipping to other countries)
VAT Refund Process
1. Shopping and completing a tax refund form
When making purchases over £50, it’s recommended to ask the merchant for a tax refund form. VAT refunds are only applicable for items bought within three months prior to departure. If you plan to stay in the UK for longer than three months, it’s advisable not to make advance purchases. Before heading to the airport, it’s a good idea to complete your tax refund form and keep it along with your receipt.
Each shop may provide a different tax refund form, depending on the VAT refund agent they use. Some of the commonly used VAT refund agents include Global Blue, Premier, Tax Free Worldwide, GB, Innova, and others.
When submitting your tax refund form, you’ll have the option to choose between a cash refund with a £2.75 fee per transaction or a refund to your card.
2. VAT refund at the airport
It may be different at each airport. The VAT refund process at many international airports in Europe is to let the customs officers check the VAT refunded items first, then enter the security check, and finally find a VAT refund company to handle the VAT refund. But London Heathrow Airport is before the security check can handle all the tax refund matters.
Both models are great. The most important thing is to arrive at the airport early and reserve enough time. Especially during holidays or peak tourist seasons, the queue of people waiting to get their tax refund will be huge.
3. Documents to be prepared for VAT refund
- Passport
- Air ticket
- Tax refund form
- Shopping receipt
- Goods to be refunded (don’t check your luggage in early, the customs will check whether the goods you bought are the same as those on the receipt and tax rebate, if you can’t show the goods, the refund can’t be processed)
4. Cash or bank card refund?
If you prefer a reliable and immediate refund, opting for a cash refund is recommended. You can receive the money on the spot. Alternatively, if a cash refund is not available, you can choose to receive the refund on your bank card. The refund will be processed within a few working days and credited back to your card. However, it’s crucial to ensure that you accurately fill in all the required information when selecting this method.
VAT Refund Locations
– London Heathrow Airport Tax Refund Counters
- There are VAT refund counters both inside and outside the T2 terminal, accepting VAT refunds worldwide. The working hours are 5:00-22:00.
- T3 Terminal has a VAT refund counter inside and outside customs. Refunds are accepted for goods purchased in any European country. The working hours are 5:00-22:00.
- T4 also has a VAT refund counter inside and outside customs. The working hours are 5:00-22:00, and there is a VAT refund post box.
- T5 has three VAT refund counters, accepting worldwide VAT refunds, all of which are available for cash refunds. The working hours are 6:00/6:30-22:00.
It’s important to remember that VAT refunds at the airport cannot be processed in advance. If you have an early morning flight, it’s advisable to obtain your VAT refund at the shopping center on the same day of your shopping. This ensures a smoother process and avoids any inconvenience at the airport.
– Other VAT Refund Locations in the UK
In addition to airport VAT refunds, some larger shopping areas also have VAT refund offices. However, other VAT refund offices have stricter checks than airport VAT refund offices and are generally only for refunds on goods purchased in the UK. Remember to carry your VAT refund items, airline ticket and passport, and a tax return from the UK (not from Europe).
Westfield Refund Point, London
Downtown Refund Point, Unit C 302A, Ariel Way London
Oxford Street Tax Refund Point, London
Downtown Refund Point, 339 Oxford St
Edinburgh Tax Refund Point
Downtown Refund Point, 3 Princess,3 Princes St, Edinburgh
Bicester Shopping Village Tax Refunds
ChangeGroup has a shop in Bicester Shopping Village and offers tax refunds.
Gatwick Airport
Gatwick Airport is divided into South Terminal and North Terminal. Both terminals have a MoneyCorp VAT Refund Counter, which provides cash and bank card refunds.
FAQ
Duty-free means the exemption of goods from import duties and VAT incurred at the time of importation, which varies from 20% to 100% for different goods. There is no restriction on duty-free goods. Anyone who leaves the country and provides a passport and airline ticket can buy something at a duty-free shop.
Tax-free refers to consumption tax and VAT. The tax rate in the UK is 20%, and the actual amount of tax refund is about 12-14% of the total price of the goods. The refund is subject to status restrictions, mainly for tourists and non-EU residents about to leave the EU.
The VAT refund is fixed. Suppose the tariff rate of a commodity is higher than the VAT. In that case, it is the most cost-effective to buy it in a duty-free shop, such as tobacco, wine and tea, perfume, and cosmetics, all of which are cheaper in a duty-free shop.
And like some luxury goods, such as bags, clothes, shoes, accessories, etc., the tariff rate is not high in the first place, so it is the cheapest to buy them in shopping malls or boutiques and then get a tax refund.
This can be categorised into three situations:
1. You have purchased an interline ticket, which means that you do not have to leave the airport to change planes and fly straight back home. In this case, you must get a UK VAT refund.
2. You bought a connecting ticket, but the transit time is over 12 hours. In this case, you will likely be asked to get a refund for your checked baggage in the UK and then get a refund for your carry-on baggage in the Netherlands. But it’s usually not such a hassle.
3. You have purchased a non-combined ticket. For example, suppose you are travelling to the Netherlands for a few days before returning to your home country. In that case, you must go to the Netherlands for a refund. This is because VAT refunds need to be made at the last stop before leaving the EU.
